Industry Chatter: Colgate-Palmolive and Unilever?

Jul 17, 2007 | Contact Author | By: Rachel Chapman
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Title: Industry Chatter: Colgate-Palmolive and Unilever?
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Shares in Unilever reportedly rose more than 2% in the last week thanks to speculation in the market that Colgate-Palmolive Co. may be interested in acquiring all or part of the company, according to AP. Unilever, with such personal care brands as Pond's, Closeup, Sunsilk, Vaseline, Dove soap and Axe antiperspirant, did not return a call seeking comment, reported AP.

Shares in New York-based Colgate-Palmolive, whose brands include Colgate, Palmolive, Mennen, Softsoap and Irish Spring, rose 1% to US$66.43 and the company is valued at approximately US$33.64 billion, claimed reports.

"We do not comment on rumors as a matter of policy," said Allison Klimerman, a Colgate-Palmolive spokeswoman, in the press announcement.

According to reports, shares in Unilever rose 2.2% in London to close at 1,683 pence (US$33.96), putting the company's market capitalization at about £22.1 billion (US$44.6 billion).

Market analysts at Oppenheimer noted that it has long been believed that Unilever wanted to acquire Colgate-Palmolive someday, and that there would be substantial cost synergies, especially in Latin America, where both companies have strong market positions, according to an AP report. However, the reverse situation—that Colgate-Palmolive may acquire Unilever—is less expected.

Neither Unilever nor Colgate have commented on the share movements.

The landscape of the personal care industry continues to be reshaped as manufacturers seek either to focus on—or sell off—their personal care divisions or specific brands. In May, L'Oréal acquired Irvine, Calif. USA-based PureOlogy Research LLC, commenting: "PureOlogy will allow our professional products division to strengthen even further its position in the top end hairdressing salons where the brand has a strong potential.”

This month, the finished goods giant also acquired salon distributor Maly's West, complementing its plan to increase its presence in the US salon hair care market. Maly's West will also be integrated into its professional products division. 

Another example of acquisitions and refocusing includes Personal Products Company, a unit of Johnson & Johnson, entering into an agreement to purchase the Rembrandt Brand of oral care products from The Gillette Company;  and prior to that, P&G's acquisition of Gillette—"We are both industry leaders on our own, and we will be even stronger and even better together," commented A.G. Lafley, P&G chairman, president and chief executive, in the press release.

Whether Unilever and Colgate-Palmolive merge or not, it makes good business sense for companies to grow their strengths, and it makes for interesting times in the personal care industry to watch as the playing field shifts.

In related news—although not necessarily related to rumors of acquisition—Unilever plans to close three offices dedicated to sales and marketing in southeast England with the loss of up to 350 jobs, according to reports. The sites in Walton-on-Thames, Surrey; Kingston-upon-Thames, in southwest London; and Crawley, West Sussex will reportedly close by the end of next year.

The company said 40 senior management roles and between 260 and 310 other jobs would be lost, reported BBC news. A new merged operation will be located in Leatherhead, Surrey. Unilever has been restructuring the business under its One Unilever programme over the past two years in an attempt to improve performance, says reports; the company reportedly said the loss of the sales and marketing jobs were the result of "speeding up the changes."

-Rachel Chapman, Cosmetics & Toiletries magazine